In our previous post, we looked at the difficulty some people face when determining which child gets what part of the estate. The fact is that it is often difficult and/or undesirable to give each child an equal inheritance. In cases where the inheritance setup is unequal, parents need to consider the very real possibility of legal problems down the road.
Here we’ll continue looking at measure parents can take to ensure that unequal inheritances don’t later give rise to a will contest.
In addition to the suggestions we made in our last post, which amounted to taking steps outside of the will itself, a very good technique is to add statements inside your will explaining any disparity in inheritance. This is an especially good idea when the reason for the disparity has to do with financial or family needs rather than behavior. According to estate planning experts, children are prone to translate the amount of inheritance received into the amount of love a parent had for each child.
If the grieving process is ongoing, children are liable to not be thinking clearly. Explaining your reasons for the disparity in your will and reassuring children that those decisions were not made out of partiality but out of practical considerations is helpful in taking the “sting” out of an unequal inheritance.
Adding explanations to a will may work well for some parents, but others may be wary of leaving unequal amounts to children in their will. One option for parents wishing to avoid this, but who still want to leave more to one child, is to take advantage of tax-free annual gifts. One could pay directly for health care or tuition costs, or give a child up to $13,000 per year, free of tax.
Yet another option is to set aside a certain amount of your estate and leave an equal amount to each child. The remaining portion can be put into a trust and set aside for the emergency needs of the children. The trustee in charge of the fund would determine when to make distributions.
In our next post, we’ll finish discussing this topic
Source: Wall Street Journal, “Wills: How to Give One Child Less,” Rachel Emma Silvernman, Sep 10, 2001.